Market Structure and Market Policy
There are a lot of types of market structures that has been being used by private firms in the industry in order for them to attain market competitiveness of just to cut over their competitors in the industry. Nevertheless, market structure provide us a framework on how business firms behavior and the reason why they behave such. Monopoly, oligopoly and monopolistic competition are some of the most common market structures prevalent in the market. In order for a monopoly to exist there should have one producer and many buyers in the market giving the former the full chance of maximizing their profits through indiscriminate price hike; an example of a monopolist would be Microsoft. On the other hand, oligopoly type of market structure requires few sellers and many buyers. This allows competition to determine the level of price of goods and services in the market assuming that those few sellers will not form a cartel which is a type of an oligopoly.
Monopoly and cartel has been prohibited by most of the government around the globe due to its unreasonable price charging as well as promotion of unfair competition which makes the whole economy inefficient. This is the reason why some policies like the Anti-Trust Law have been enacted in order to provide protection to the consumer group as well as to promote fair competition in the market (Markham 1). Through government intervention, private firms will now be restricted to abuse their market influence especially for necessity goods like medicines, normal goods and other basic needs of an individual. At this point, through under standing various market types existing in the market would serve as an avenue to fully grasp the idea behind the provision of government policies like the Anti-Trust Law.
Markham, William A. “An Overview of Antitrust Law.” 2000. Maldonado & Markham LLP: Attorneys and Counselors at Law. 19 February 2008 <http://www.maldonadomarkham.com/Antitrust-Law-San-Diego.htm>.